Oil prices pulled back in volatile trading as the market's focus returned to oversupply risk as Saudi Arabia and other large producers ramp up production.

The escalating trade dispute between the United States and its trading partners is raising concerns about the impact on global economic growth and energy demand.

Early in the session, the market climbed amid worries over supply after tensions worsened between Iran and the United States.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images

Oil prices pulled back in volatile trading on Monday as both crude benchmarks fell after rallying more than $1 a barrel early in the session on escalating tensions between the U.S. and Iran.

U.S. light crude ended the session down 37 cents at $67.89 a barrel, after peaking at $69.31. Brent crude oil rose to a high of $74.50 before easing back to trade 6 cents lower at $73.01 by 2:27 p.m. ET.

The latest downward jog came after the market focus returned to oversupply risk as Saudi Arabia and other large producers ramp up production ahead of the November deadline for other countries to comply with U.S. sanctions on Iranian crude sales, said Phil Flynn, an analyst at Price Futures Group in Chicago.

"They're just continuing to chase from one headline to another," Flynn said. The market is continuing volatile swings that were seen last week, he said.

The market was weighed down by concerns about the impact on global economic growth and energy demand of the escalating trade dispute between the United States and its trading partners.

Finance ministers and central bank governors from the world's 20 biggest economies ended a meeting in Buenos Aires over the weekend calling for more dialogue to prevent trade and geopolitical tensions from hurting growth.

"Downside risks over the short and medium term have increased," the finance leaders said in a statement.

The talks occurred amid escalating rhetoric in a trade dispute between the United States and China, the world's largest economies, which have already slapped tariffs on $34 billion worth of each other's goods.

U.S. President Donald Trump threatened on Friday to impose tariffs on all $500 billion of Chinese exports to the United States unless Beijing agreed to major changes to its technology transfer, industrial subsidy and joint venture policies.

Economic and oil demand growth are correlated as expanding economies support fuel consumption for trade and travel, as well as for automobiles.

Early in the session, the market climbed amid worries over supply after tensions worsened between Iran and the United States, while some offshore workers began a 24-hour strike on three oil and gas platforms in the British North Sea.

Iranian Supreme Leader Ayatollah Ali Khamenei on Saturday backed a suggestion by President Hassan Rouhani that Iran could block Gulf oil shipments if its exports were stopped.

The Iranian leadership was responding to the threat of U.S. sanctions after President Donald Trump in May pulled out of a multinational agreement to trade with Tehran in return for its commitment not to develop nuclear weapons.

Late on Sunday night, Trump tweeted that Iran risked dire consequences "the like of which few throughout history have suffered before" if the Islamic Republic made more threats against the United States.

"Attention is being focused on geopolitical tensions, particularly between U.S. and Iran," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. "Fundamentally, we do have a tighter picture than we had twelve months ago."

U.S. crude had also earlier pared gains on inventory data from information supplier Genscape, traders said. Inventories at the Cushing, Oklahoma delivery hub had risen slightly in the second half of the week from Tuesday to Friday, though they were still on track to fall for the entire week, traders said.